towns, which is at once more convenient to the merchants and an important guarantee for the collection of the duties should they be sent into the interior.

"I have," says Mr. Velasco, "in vain endeavored to discover how the Free Zone can possibly be the cause of sinuggling. In the discussion of last year the honorable secretary of the treasury, in reply to an inquiry of mine on this point, assured us that merchandise stored in any of our towns within the Free Zone may be extracted from the stores and sent in perfect liberty, without any interference from the custom-house, and without any kind of certificates, throughout the whole Zone. When the secretary used this language he undoubtedly had not studied the text of the law of the Free Zone. If he will consult the fourth article of the law of March 17, 1858, he will thero find the regulations, which were carefully drawn up, expressly to apply to the case of attempted frauds in the transportation of goods to the interior, under pretext of carrying them to other points of the zone.

"The citizen secretary of the treasury affirms that the passes and other documents relating to the transportation of goods from one point of the Free Zone to another are useless, because they are the same that are issued from custom-houses in other ports of the republic, and that in all ports alike they give occasion to frauds. I must insist that this system of judging the frontier by the rest of the country necessarily leads to great errors, and the secretary has fallen into a very grave one on this subject. In other ports the duties are paid on importation, but in the settlements of the Free Zone they are paid on being sent into the interior. Consequently the passes in the former case do not prove the payment of duties, while the passes given in the ports of the Zone contain the account-current of the duties, and therefore prove their payment. The documents of the custom-houses on the frontier are not, then, useless nor inefficacious, as the citizen secretary of the treasury imagines. On the contrary, a contraband traffic on the frontier can now only be effected by means of military seditions, or by the connivance of the employés of the treasury.

"As an example of the relative advantages of the two systems in a case of sedition, take that of Matamoras and Tampico, which both revolted against the federal government in 1867. Duties at Matamoras are paid on being sent into the interior. The passes given at that port were not recognized as valid during the insurrection, and, as a consequence, no interior commerce was permitted until the restoration of order. On the contrary, at Tampico, although the port was declared closed, this did not prevent heavy importations; and as the duties are paid on landing, the treasury suffered immense losses, since these importations left no trace behind. The Zone will thus always be an obstacle to the mutinies or seditions which might otherwise be stirred up for the purpose of protecting smuggling. As the duties are to be paid elsewhere, it very little concerns the treasury when a frontier town declares itself in rebellion.

"The Zone also renders much more difficult the contraband trade, which rests on the connivance of the customs employés. Without the Zone, when the goods were deposited in American warehouses, the fraud could be planned and carried into effect in twenty-four hours. Entire cargoes could thus be passed across the river in the shortest space of time. Now, however, the difficulties are immensely greater in effecting frauds with the connivance of employés through the more complicated system of documents which must be provided."

The

Mr. Velasco proceeds to show that the recent revival of contraband traffic in some portions of the interior is owing to the suppression of the internal custom-houses, which rendered it sufficient to obtain the connivance of an officer of customs. counter-inspectors are designed to correct this evil. If, then, there should at any custom-house of the frontier be committed any frauds upon the quantity and quality of the goods dispatched from the interior, it will be readily discovered by the counterinspection.

Mr. Velasco proceeds to draw a picture of the low state of commerce along the Mexican bank of the Rio Grande in 1858, and to contrast it with its present prosperity, which he ascribes entirely to the Free Zone. At the same time he points out the reverse condition of things upon the American shore as a proof that the former wellbeing of those towns was entirely owing to their having a monopoly of the Mexican trade, which the Free Zone has but transferred to the other side of the river, where it ought to be.

In reply to the proposition of the secretary of the treasury, who was willing to concede ports of deposit in lieu of the Free Zone, Mr. Velasco argues that as the Americans already possess them, and are in a condition to derive greater advantages from them, through their superior industry and enterprise, this concession would be entirely insufficient to maintain a commercial equilibrium between the two sides of the river, and the left bank would rapidly recover its former preponderance. Consequently, in the name of the people whom he represents, who are the inhabitants of the present Free Zone, Mr. Velasco declares that if the Zone is to be abolished, his constituents would regard the offer of ports of deposit as an insult added to injury, and would prefer to suffer in silence rather than be the object of a compassion very similar to irony. After replying to various minor inaccuracies of the secretary of the treasury, Mr.

502

Velasco proceeds to consider the Free Zone as a vital necessity for the frontier, and to He quotes at show that it should be extended to the states of Coahuila and Chihuahua, as was the intention when the plan was first broached by the executive in 1852. length from a message of the executive of that time to show that the Zone was considered to be but a just recompense to the people of the frontier for the privations and dangers which they constantly incur in behalf of the whole nation. He also shows the decadence of Paso del Norte and other northern towns through lack of this privilege.

In conclusion Mr. Velasco says that free consumption is an accomplished fact upon the frontier, for the reason that nature and the necessities of the people have so required, and any attempt to revoke this liberty might occasion the dismemberment of the republic.

No. 33.]

NICARAGUA.

No. 295.

Mr. C. N. Riotté to Mr. Fish.

LEON, March 2, 1870. (Received April 11, 1870.) SIR: I have the honor of laying before you inclosed copies, respectively translation of the following documents, viz:

1st. Inclosure A, letter from her Britannic Majesty's chargé d'affaires in Central America, Mr. E. Corbet, of January 25th last, in answer to my communication, of December 28th ultimo, on the case of Mr. and Mrs. M. Glenton.

2d. Inclosure B, note to the Nicaraguan government, of January 29th ultimo, on the action of the directors of the Panama Railroad Company against Captain T. A. Douglass.

3d. Inclosure C, reply thereto by the government, of February 5th, with translation.

4th. Inclosure D, letter of General A. T. A. Torbert, United States minister in San Salvador, of February 21st last, on the importance of es tablishing a naval station of the United States on Tigre Island, Bay of Fomeca.

5th. Inclosure E, my reply thereto, of February 26th last.

I will permit myself to submit a few remarks on the subject of these two last notes. As you perceive from my answer to General Torbert, I do fully agree with his view. I will not attempt to argue the strategical and topographical side of the question. To do full justice to that, my colleague is more competent authority than I; and besides, a mere glance at the map, showing that in the long-stretched and every day in importance growing western coast of America south of San Francisco, our country is destitute of even a good harbor of her own, let alone a naval establishment or place of refuge, if only for cases of accidents or disasters, will at once powerfully advocate General Torbert's plan. There is another consideration in its favor, namely, the fact that not one of these Spanish North American republics, little Costa Rica excepted, until now has been able to erect on their dangerous coasts a single light-house. The pecuniary considerations entering into the ques tion, I must deem it out of my sphere. But there is an international and political consideration eminently sustaining the plan. It cannot be denied that these republics, however slowly, and impeded by their po litical convulsions, are growing in commercial importance at a par the increasing commercial facilities between them and the marts of the

with

world and the demand of the civilized world for their valuable productions. This tends to give a more and solid growth to their productive energies and to their attractive power upon foreigners and particularly Americans; but it not less contributes toward imparting them with an idea of their importance among nations.

C. N. RIOTTÉ.

A.

Mr. Edwin Corbet to Mr. C. N. Riotté.

GUATEMALA, January 25, 1870.

SIR: I have the honor to acknowledge the receipt of your letter, dated 28th ultimo, which reached me by last mail, informing me of the steps you had taken to procure redress from the government of Nicaragua for Mr. M. Glenton, who had been compelled to contribute to a forced loan decreed by that government, and I beg to thank you for the trouble you have taken in his behalf.

As he has furnished me with no proofs of his nationality I cannot at once address the government of Nicaragua in support of his claim. If I receive satisfactory proof that he is entitled to the protection of her Majesty's government, I shall at once demand the redress to which he will be entitled.

This is a true copy.

B.

EDWIN CORBET.

C. N. RIOTTE.

SIR:

Mr. C. N. Riotté to Hon. Tomás Ayon.

#

LEGATION OF THE U. S. A., NICARAGUA,

Leon, January 29, 1870.

Toward end of the month of August last I re

ceived information that Captain Douglass, of the Panama Railroad Company's steamer Guatemala, had compromised the neutrality of his company and of the flag under which its steamers sail, by carrying for and delivering to the agents of the so-called provisional government at Leon powder, lead, and caps. The information was of such trustworthy character that I did not hesitate, in vindication of my country's flag and of the to me well-known perfectly neutral intentions of said company, to report the transaction to it. The company thereupon at once suspended Captain Douglass from office. The instruction of the case, ordered by the company, consumed some time, in part owing to the distances and in part to the fact that it was difficult to procure witnesses. On November 10th an inhabitant of this city made affidavit before me on what he, August 15th and next days, witnessed in the Bay of La Union and at Tempisque, which was communicated to the company. On the strength of that affidavit and some additional proof the company, as I have been advised by a letter received the 25th instant, has dismissed from its service not alone Captain Douglass, but the purser of the steamer, Mr. E. Hansen, too. That letter states that although the case of Captain Douglass was not an entirely clear one, the company thought it well to make an example of him. Inasmuch as on different occasions during revolutionary movements within the Central American States, the good faith and strict neutrality of the Panama Railroad Company has been doubted, and even incriminations of the reverse have been advanced, I consider it proper to advise your government of this its recent action. C. N. RIOTTE.

Hon. TOMÁS AYON, &c., &c.

C.

*

Hon. Tomas Ayon to Mr. C. N. Riotte.

[Translation.]

MANAGUA, February 5, 1870.

SIR: I received the note with which you addressed me under date of 29th ultimo, communicating to me that toward end of last August, (here fol

lows a literal repetition of the contents of my note.) I laid your dispatch before the President of the republic, and was ordered to thank you for your good offices in the matter. The conduct of Captain Douglas, who, from the fact that he entered into independent contracts on new steamer lines, was considered to have left the company's service, had indeed caused surprise, not alone in Nicaragua, but also in the neighboring republics, for his open participation, by carrying elements of war to the rebels, who were devastating the country. The government was engaged in collecting all proofs in the case, with a view to remonstrate against the conduct of the employés of the company, but the measure it has taken in order to prove its neutrality dispenses the government from taking further steps.

If, during the revolutionary movements in other republics, the good faith and strict neutrality of the Panama Railroad Company has been doubted, the government is ignorant of the causes. So far as regards Nicaragua, the conduct of Captain Douglas furnishes cause for just incriminations, which the company, by dismissing him from service, has dispensed.

The foregoing are true copies and translation.

TOMAS AYON.

D.

Mr. A. T. A. Torbert to Mr. C. N. Riotte.

C. N. RIOTTE.

UNITED STATES LEGATION,

SIR:

San Salvador, February 21, 1870.

Will you unite with the rest of the ministers in Central America to press upon the home Government the importance of having a naval station in the Bay of Fonseca, on Tigre Island? We have no station between San Francisco and Panama, and the place I name is the best harbor between the two places, and convenient to all the republics; and for various natural reasons the presence of one of our ships of war is constantly needed in Central American waters. I think the best thing would be for the United States to get possession or control of Tigre Island.

I have written to Baxter by this mail. I was in Gautemala last week and had a talk with Mr. Hudson, and he will urge this point on the Government. Let me hear from you.

A. T. A. TORBERT.

E.

Mr. C. N. Riotte to Mr. A. T. A. Torbert.

UNITED STATES LEGATION, NICARAGUA,
Leon, February 26, 1870.

SIR: I have received your note of the 21st instant, and will not omit to call the attention of the Department of State to the important subject therein mentioned. During the last trying six months I seriously felt the absence of a national vessel, which I was unable to have sent here in spite of repeated requests on my part, C. N. RIOTTE.

These are correct copies.

C. N. RIOTTE.

No. 230.]

PERU.

No. 296.

Mr. Alvin P. Hovey to Mr. Fish.

LEGATION OF THE UNITED STATES,

Lima, Peru, August 22, 1870. (Received October 14.) SIR: As by this time you will have received my resignation as envoy extraordinary and minister plenipotentiary of the United States of America near the government of the republic of Peru, I deem it to be my duty to lay before the Department of State a short outline of my

505 services since the 10th of October, 1865, and views in regard to the present political and social condition of this republic, believing this to be necessary to aid my successor, and to place within easy reach of the Department such facts as may be of future service to our country.

Arriving in Lima, the capital of Peru, on the 20th of November, 1865, I found the city in the midst of a revolution between the forces of VicePresident Canseco and those of President Pezet. The dead were yet lying in the plaza. Much gallantry was displayed by the assailing party under Colonel Prado; Pezet's forces were compelled to retire with defeat, and Vice-President Canseco assumed the reins of government, with wild demonstrations of passion against Spain.

On the 26th of the same month, about sixty officers met, and resolved to appoint a dictator, and concentrating about two thousand persons in the plaza, or public square, proclaimed Colonel Mariano Ignacio Prado Dictator of Peru.

Under my instructions I awaited to "only recognize the constitutional government" until the 22d of May, 1866, when I was presented with all the courtesies due to a minister from the United States. This policy on the part of our Government was wise, although, for the time being, it retired me to the shades, and gave every other minister here a temporary triumph over me.

Going behind the date above named, I must not omit an important. historical event, both for Peru and the cause of history, the 2d of May, 1866, “El Dos de Mayo," when the great battle of Callao was fought. On the 1st of May, after Mendez Nunez, the admiral of the Spanish fleet, had announced his intention to bombard Callao, as he had done Valparaiso, I was sent for by President Prado to meet him. He was surrounded by his cabinet, Galvez, Pacheco, Prado, Quimper, Tejeda, and by several of his staff, whose names I do not now remember. On entering the room, the President approached me and said, "I have sent for you to advise with you, not as a diplomat, but as one of the best friends of America in our great emergency. What do you think of to-morrow?" I replied that as an officer of my Government, that held friendly relations with both Spain and Peru, I had no right to advise him. "But," said he, "tell me privately, as a friend, what are your opinions?" I replied to him, and in this I may have done wrong, "If the fleet fight you with vigor and in the proper manner, they ought to whip you in fifteen minutes." The President and the entire cabinet seemed surprised, and desired to know my reasons. ten guns to your one, and if they close upon you so as to effectually use I replied, "The Spanish fleet can fire shell, grape, and canister, I believe they will silence all your batteries, and destroy your town; your only hope is to make them fight you at long range."

Galvez, the secretary of war, took issue with me, and did not believe that my views were correct. I said to him, "Very well, Mr. Secretary of War, Peruvians may be able to meet ten guns with one, but my people, though I have seen some little service, are not so firm and brave." The President then inquired what should be done. I repeated to him: "Make them, if possible, fight you at long range, and then you are sure of victory." "But by what means?" "It is not for me to dictate or say, but torpedoes are dangerous, and ships and sailors have a holy horror of such infamous and profane implements of war." That night, by some means, forty barrels of powder, connecting by wires with an electrical battery on shore, were sunk in the bay. The French informed the Spanish fleet of this fact, and before morning nearly every wire was cut. But the battle came on, on the glorious "Dos de Mayo,"